The Collected Works of Author and Blogger Larry Roberts

Archive for November, 2015

The conditions that caused house prices to crash far below fundamental values will likely never happen again. During the 00s house prices rose far above any justifiable fundamental value juiced by affordability products. When these products proved unstable, millions of delinquencies and foreclosures followed, and house prices crashed far below fundamental values. In 2012 a house price rally reflated the old bubble back to a new and higher equilibrium price based on record low mortgage rates and stable loan products. In order to gain control of the distressed inventory on the MLS, lenders instituted new loss mitigation programs of aggressive loan modification, also known as kicking the can. If implemented in the future (assuming another unlikely mortgage disaster), must-sell inventory…[READ MORE]

At the height of the housing bubble hundreds of bloggers wrote about the real estate market, but over time, the genre has almost completely disappeared. The 00s were the golden age of real estate blogging. Many people from all walks of life realized house prices were a real estate bubble, and legions of citizen journalists said so. Housing blogs proliferated, but rather than experiencing an over-saturation, the phenomenon fed on it's own energy. It was a special time. Unfortunately, all good things must end, and even the most interesting and exciting times fade from the headlines; life goes on. After the Gold Rush Posted November 6, 2015 by Joshua M Brown ... I wanted to touch on the state of…[READ MORE]

Rising interest rates would put money into the hands of savers, particularly seniors, who will spend it on goods and services and stimulate economic growth. Last week I wrote about interest rates. In the post Will Janet Yellen capitulate to greedy bankers and raise interest rates?, I lampooned a poorly reasoned heap of manure published by a Chase Bank lackey. The central thesis of the study was that rising interest rates could stimulate the economy. Last Friday I met with a close friend who is a professional asset manager with 30+ years experience closely watching the economy and financial markets. I greatly value his opinion and the talks we have. He thought my post was too dismissive of the idea,…[READ MORE]

Historically, properties in this market sell at a 9.5% discount. Today's discount is 13.7%. This market is 4.1% undervalued. Median home price is $509,200 with a rental parity value of $593,600. This market's discount is $84,400. Monthly payment affordability has been improving over the last 1 month(s). Momentum suggests unchanging affordability. Resale prices on a $/SF basis declined from $403/SF to $402/SF. Resale prices have been falling for 1 month(s). Over the last 12 months, resale prices rose 3.8% indicating a longer term upward price trend. Median rental rates increased $7 last month from $2,615 to $2,622. The current capitalization rate (rent/price) is 4.9%. Rents have been rising for 12 month(s). Price momentum signals rising rents over the next three…[READ MORE]

Previous loan modifications and old HELOCs face reseting to higher rates and recasting to full amortization likely leading to further loan modification. Lenders don’t want to modify loans. They would far rather have the borrower pay in accordance with the promissory note they both signed when the loan was originated. Ordinarily, if a borrower is unable or unwilling to pay in accordance with the original terms, the lender would simply foreclose, get their loan money back, and loan that money to someone who will pay in accordance with the promissory note. Unfortunately, with so many borrowers underwater, lenders can’t foreclose and get their money back, so instead they modify loans to buy time until the resale value is higher than…[READ MORE]

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